FIXED PERCENTAGE REVIEW DATES

Discussion in 'Commercial Property' started by Ali Riza MOZAFARI, 10th Aug, 2018.

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  1. Ali Riza MOZAFARI

    Ali Riza MOZAFARI New Member

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    I am looking at a lease contract for a commercial where it specifies a FIXED PERCENTAGE REVIEW DATES where the rent goes up by a fixed percentage. I wanted to know what is this percentage based on? Is it based on the property value or rental income?
     
    Ali Riza MOZAFARI, 10th Aug, 2018
    #1
  2. UrbanPlanner

    UrbanPlanner Well-Known Member

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    Generally it's the increase is on the annual rent. Depending on how the lease is structured it will be either the gross rent or net rent.
     
    UrbanPlanner, 10th Aug, 2018
    #2
  3. Ali Riza MOZAFARI

    Ali Riza MOZAFARI New Member

    Joined:
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    Location:
    Parklea, NSW
    yeah makes sense

    cheers
     
    Ali Riza MOZAFARI, 10th Aug, 2018
    #3
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    Wind direction.

    This is determined when offer and acceptance is made.

    I'm currently negotiating a few with a CPI or fixed % ratchet but the % is what you negotiate.

    Gross or nett doesn't matter for the review as a different mechanism may apply to each eg fixed $ or % on rent component and an increase over a base year for outgoings
     
    Scott No Mates, 11th Aug, 2018
    #4
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Various measures of CPI are used as a benchmark...CPI itsself is often too vague.

    All Groups CPI is a weighted benchmark of the subgroups. Or use a city based portion of the benchmark or you can use a specific measure for the industry involved eg Health may be used for a health provider, medical clinic etc

    6401.0 - Consumer Price Index, Australia, Jun 2018

    Others pick a specific number eg 2.5%
     
    Paul@PAS, 16th Aug, 2018
    #5